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REONET NEWSLETTER AUG 09 9

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REONET NEWSLETTER AUG 09 9 Powered By Docstoc
					                                                                                                                                                                        JULY 2009




Reonet On The Move
Is it possible?!... already halfway through 2009!... maybe the credit crunch induced everyone to fast-forward!

Our First Newsletter                                             Our Operating Divisions
In this, the first of our quarterly newsletters, which we
plan to produce at the end of April, July, October and
January, we concentrated on Reonet’s history, our                      Reonet Technologies
current projects and our exciting product RealSens.
We would appreciate feedback from you, our readers,                                                                             Reonet Technologies,
so that we can produce newsletters that are                                                                                     headed up by Iaan de Beer,
newsworthy, appealing, informative and topical.                                                                                 specialises in the                    Iaan de Beer
                                                                            For Utility Providers, Consumers and Sub-Metering
                                                                                             Facilities Managers                development, installation
                                                                                                                                and operation of automated
Business Consolidation                                                                                                          meter reading [AMR], or
                                                                                                                                more accurately, advanced
First order of business for Reonet in 2009 was to                                                                               metering infrastructure [AMI]
consolidate our various business interests in the                                                                               systems. With RealSens, its
automated meter reading [AMR] / advanced metering                                                                               AMI technology, Reonet
infrastructure [AMI] market. Reonet is pleased to                                                                               Technologies placed itself
announce that it bought the Cape Town based company                                                                             at the forefront of the utilities
Hydrometrix Technologies, which had been working                                                                                metering, automation,
on the development and installation of AMI products                                                                             control and management
for many years. Reonet also entered into exclusive                                      REONET TECHNOLOGIES                     sector.
supply agreements with another Cape-based company,
Cape Digital Solutions, for the manufacture of all of its
RealSens* AMI system components. Reonet and Cape
Digital Solutions will continue to invest into the R&D                 Reonet Utilities
of RealSens*, so as to continually improve functionality
and to drive down costs.                                                                                                        Reonet Utilities specialises
                                                                           Turnkey Solutions for Utility Efficiency
                                                                                                                                in the improvement of utility       Mandu Nompunga
Our Company History                                                                                                             operations. This is achieved
                                                                                                                                by reducing losses,
In 1988 Altus de Beer founded a consulting civil                                                                                increasing revenues and
engineering practice with a particular focus on the                                                                             improving operational
planning and development of water infrastructure. In                                                                            efficiencies. Reonet Utilities
1997 Altus resigned as senior partner from the company                                                                          delivers its specialised
he founded in 1988 to start a new business that                                                                                 service solutions through a
specialised in water resources development and utility                                                                          unique combination of
management. In 1999 this business merged with a                                                                                 proprietary technologies and
prominent electrical engineering consulting business,                                                                           know-how and a self-funded
to form a specialised multi-utility professional services                                                                       business model.
firm. Reonet traded as the water division of this                                        REONET UTILITIES
company.

In 1996, Iaan de Beer independently established                        Reonet Projects
Hydrometrix Technologies, a company that specialised
in water metering, the detection and control of
environmental parameters and the collection and                             Low Total Cost Water & Energy Facilities                                                 Altus de Beer
management of utility field data.

In September 2007, the management of Reonet                                                                                     Reonet Projects, headed up
purchased Reonet as a going concern through a                                                                                   by Altus de Beer, is a
management buy-out transaction.                                                                                                 promoter and developer of
                                                                                                                                utilities infrastructure, in
                                                                                                                                particular water storage
In May 2008 the management-owners of Reonet sold                                                                                dams, small hydro-electric
a controlling interest in Reonet to a black economic                                                                            facilities and bulk water
empowerment [BEE] investment company. Under it’s                                                                                supply systems.
new ownership and management, Reonet was
restructured into three distinct operating divisions,
namely Reonet Technologies, Reonet Utilities and
Reonet Projects, respectively. As part of the BEE                                       REONET PROJECTS
transaction, Mr Mandu Nompunga became the
managing director of Reonet Utilities.


RealSens* trademark application is pending in several jurisdictions.
                                                   REONET Makes the Difference
RealSens* Project News
Reonet was incredibly busy (and lucky) during the first half of 2009, especially
with major further advances in the development and installation of its
automated meter reading [AMR] / advanced metering infrastructure [AMI]
product, RealSens*. We now have installations in various utility environs
(up-market housing, low-cost housing, industrial facilities and high-rise
apartments) and the results from our online, remote utility metering data is
very encouraging and interesting.

We have already been able to demonstrate how our RealSens* AMI system
can repay itself within a few months by detecting water leaks for sub-metered
water consumers. We have also been able to demonstrate the value of
RealSens* to utilities providers, in that they were able to detect unmetered
consumption, and through the future revenue recovery from that source
alone, justify the installation.

City of Cape Town AMR / AMI Pilot Project                                               Google Earth Epping Industrial              Google Earth N2 Gateway


                                                                                      The pilot project was implemented in the following stages:
                                                                                   1. Gathering of meter and billing data from the City of Cape Town
                                                                                      billing records

                                                                                   2. Comprehensive field audits to assess the compatibility of installed meters

                                                                                   3. Replacement of faulty meters and incompatible meters

                                                                                   4. Installation of the RealSens AMI system, including radio network configuration

                                                                                   5. Synchronising meter readings with RealSens system counters and
                                                                                      rectification of the billing records

                                                                                   6. Secure data hosting, data integration with other software systems and
                                                                                      processes and data management for value-add functionality


Reonet commenced with a pilot project installation of RealSens in 2008, for
the City of Cape Town, following a competitive tender process.                     Reonet experienced a number of challenges in the installation
                                                                                   of RealSens, as listed below:
The City of Cape Town has about 480,000 domestic water meter connections
that are currently manually read, through a variety of methods, including
electronically assisted devices, and using both in-house staff and private         1. The Department of Water Demand Management had difficulty -
contractors. The City of Cape Town currently achieves a successful meter              understandingly so - in “selling” this new idea to other role players. This led
read percentage of 80-85% per month.                                                  to administrative delays of a few months.
The City of Cape Town is located in a region where water demand growth             2. The City of Cape Town was responsible for the delivery of new replacement
is outstripping supply potential. One of the key strategies for addressing            meters under another tender, which was not able to fully meet either
this dilemma of demand growth versus dwindling supply, is to implement                the technical requirements or the delivery schedules of the AMR pilot project.
effective “water demand management” [WDM] programmes. For this purpose,               This led to significant time delays.
the City of Cape Town created a special Department of Water Demand
Management [DWDM]. The DWDM in the City of Cape Town realized that                 3. Existing water meters were found to be in a far worse condition than was
more consistent, more frequent and more accurate water meter readings                 initially assessed during the sample field audit. This meant that many more
would assist them to fulfil their mandate to curb losses while improving              meters had to be replaced than initially estimated, leading to increased
quality of supply. This, more than any other factor, led the City of Cape             project cost and time delays.
Town to a decision to call for tenders to implement an AMR pilot project.
The City of Cape Town received 4 compliant bids and Reonet was awarded             4. Field audits revealed some anomalies between the City of Cape Town meter
the tender, based on both the functionality offered and on price-                     records and field audit results. The process to reconcile and rectify billing
competitiveness.                                                                      meter data with the billing records, required significant resources and led
                                                                                      to further time delays. In spite of being of good assistance to the contractor,
The AMR pilot project was implemented in a variety of urban development               the billing database had to be rectified and this turned out to be a major
conditions, ranging from an affluent domestic suburb, to a very old industrial        additional project task.
suburb and a high-density low-cost housing development comprising multi-
storey apartments that had to be individually metered. The three suburbs           5. The old water networks were found to be in a generally poor condition and
thus far included in the AMR pilot project roll-out are Atlantic Beach Estate,        this contributed to the difficulties of meter change-outs, with consequent
Epping 1 and 2 Industrial areas and N2 Gateway low-cost housing, totalling            time delays.
about 1,900 meters of sizes 15mm to 250mm.


RealSens* trademark application is pending in several jurisdictions.
                                                      REONET Makes the Difference
The positive outcomes of the pilot project can mainly be summarised as:                5. The replacement of faulty or incompatible meters should either have preceded
                                                                                          the AMR installation or this function should be included as part and parcel
1. The long-overdue replacement (change-outs) of many faulty meters, leading              of the AMR tender. If meter change-outs are included, as part of the AMR
   to more accurate metering, increased revenues and timely detection of leaks            tender, then the contractor, not the client, should supply the meters, certified
   on the consumers’ properties.                                                          by an approved standards organisation.
2. The identification of specific portions of water distribution infrastructure that   6. Prior to commencement of the AMR project, the utility client should launch
   is in a particularly poor condition so that targeted upgrading projects can            an effective internal “sell” process amongst its own key staff that will come
   be scheduled and in so doing, reduce system leaks.                                     into contact with the AMR system. It is important for key utility provider staff
                                                                                          members to understand the benefits of the system, how it works and how
3. The rectification of errors in, and continued accurate maintenance of the              they will be affected by it. Failing this, there could develop internal resistance
   billing database, which would lead to increased revenues and improved                  that could lead to project failure or sub-optimal results.
   customer relations.
                                                                                       7. Also prior to commencement of the AMR project, the utility client should
4. The remote collection and delivery of accurate monthly meter reading data              launch an effective information dissemination and community participation
   for automated, faultless upload into the billing system, which would free up           process. This would go a long way towards getting buy-in from the consumer
   meter reading staff for more meaningful, value-adding functions within the             public and would build goodwill towards the utility provider.
   water utility and which would improve consumer confidence and relations.
                                                                                       8. It is important to note that the unit cost of the system drops dramatically (up
5. The immediate identification and quantification of water leaks on consumers’           to a terminal cost) if more meters are equipped in a single project and the
   properties, which, if correctly communicated and dealt with, would lead to             more “multi-utility” the programme is approached. In other words, the
   a decrease in wasteful water use and improved customer relations. By way               implementation of small pilot projects are a fine idea to “prove concept”, but
   of example, the N2 Gateway suburb is a high-density housing complex with               the relative cost of a pilot project is very high per meter unit installed,
   704 connections in multi-storey apartments. After a two-day monitoring                 compared with a large roll-out.
   period it was calculated that water savings of 43% could be achieved by
   implementing certain measures to reduce leaks on consumer properties.               9. It has become clear from the challenges experienced in the City of Cape
                                                                                          Town pilot AMR project, that the technologies, staff skills and resources
6. The automatic detection and reporting of any anomalous water consumption               required from a successful AMR / AMI installation company, requires an
   or system failures, whether through tampering or any other cause, which                entirely new type of company that has skill levels that cut across utility
   hold major operational benefits and which would reduce wasteful consumption            provision, equipment manufacturing, project management, ICT (information
   of water.                                                                              technology & communications technology) systems operations and
                                                                                          engineering / financial analysis, all focused in a narrow specialised field to
7. The ability to continuously remotely monitor specific meters in order to detect        deliver AMI systems. It is highly unlikely that equipment suppliers or ICT
   night flows and to conduct water balance audits in water supply districts,             providers could deliver a complete successful solution to utility provider
   which would directly lead to informed decisions for targeted water demand              clients. In this regard, it is important for utility clients to undertake a physical
   management interventions.                                                              “due diligence” on prospective contractors, to ascertain whether they
                                                                                          have a successful implementation track record, prior to making a
Important lessons were learnt from the City of Cape Town pilot AMR                        purchase decision.
project. The most important lessons to incorporate into
future contracts are:                                                                  10.Utility providers might want to consider an entirely new business model,
                                                                                          through which they can pass all implementation and operational risk to the
1. Prior to calling for tenders, the utility provider should have identified a clear      AMI contractor. This can be achieved by entering into multi-year contracts
   set of objectives to be achieved with AMR / AMI. The potential benefit / cost          to purchase data and functionality from the AMI contractor. The range and
   of the system should have been quantified at least at desktop level. Key               type of data can be specified as well as the type and level of functionality
   performance indicators [KPI’s] should be in place against which the system             required from the AMI system, for example, meter reading data integration
   can be evaluated after installation.                                                   into billing systems for fully automated metering and billing processes,
                                                                                          automatic leak detection, automated maintenance crew call-outs, etc. This
2. Technology in this AMR / AMI field is moving very fast and it would                    “no performance no pay” contracting method would alleviate the need to
   consequently be difficult for any utility client to foresee all the possibilities      procure funding, would automatically take care of all implementation and
   and functionalities that would be available on the market at the time of               operational risk and would ensure the fairest and most competitive “value-
   tender. It is therefore suggested that, in addition to the minimum functionality       for-money” tender process.
   requirements, the tender request and tender specifications make provision
   for the contractor / tenderer to list additional functionalities that he offers        It should be self-evident from the above that installing AMR / AMI systems
   and that these be considered as part and parcel of the “total functionality”           is much more than just improving on manual meter reading processes. AMR
   in the adjudication process.                                                           / AMI is a tool that provides decision makers with data and automated
                                                                                          processes that was not previously available to them and which would result
3. The life-cycle price and not the installation price, should be used to evaluate        in major benefits to the water utility, water consumers, the tax-paying public
   the cost of the system to the utility client.                                          at large and very importantly, the environment.
4. Any AMR / AMI system is a sophisticated combination of technologies,                   For more information on the pilot project, please visit the link below.
   including electronic hardware, software, computers, etc. In addition, this             http://www.tradeinvestsa.co.za/investment_opportunities/292508.htm
   system integrates intimately with meters supplied by other manufacturers.
   It is highly unlikely, given the skills shortages that exist in most utility
   environments worldwide, that the utility client would be able to optimally
   manage the AMR / AMI system to maximise benefit to the utility. This function
   would best be fulfilled by the supplier of the AMR system and it is therefore
   highly recommended that in calling for tenders, the supplier should be held
   accountable for the ongoing operation and maintenance of the system. It
   goes without saying that the supplier should be able to prove his capabilities
   to operate and maintain the AMR system.


   RealSens* trademark application is pending in several jurisdictions.
                                                                         REONET Makes the Difference
National Department of Public Works Water & Cost Savings Project
Reonet is also currently engaged in a project that reduces water losses and costs for the National Department of Public Works. On this project, Reonet delivers
measurable water and cost savings to the Department through a self-funded business model. Reonet, at its own expense, applies a range of proprietary
technologies and know-how to achieve water and cost savings for the Department and is remunerated solely from a portion of the measurable savings.




                             To date, Reonet has invested in excess of R 38 million on
                             equipment, installations and skilled manpower resulting in
                             savings to the Department of more than


                                                               R 46 million
                                                       Cumulative REONET Investment vs Water Cost Savings to (All Sites)

                                                                      Cumulative NDPW Water Cost Saving          Cumlative REONET Investment
                                             R 50

                                             R 45
  Cumulative Savings Millions ZAR exl. VAT




                                             R 40

                                             R 35

                                             R 30

                                             R 25

                                             R 20

                                             R 15

                                             R 10

                                              R5

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                                                    2003       2004                  2005                 2006                  2007           2008   2009




Reonet is active on seven NDPW sites in the Pretoria region each posing diverse water management and cost saving challenges. The savings have been
achieved through a combination of metering control and analysis, water demand management, pressure zoning and pressure control, implementing water
replacement and water re-use projects and other infrastructure and operational optimisations.



RealSens* trademark application is pending in several jurisdictions.
                                                   REONET In Focus
RealSens* Self-Diagnostic System
AMI [advanced metering infrastructure] is an industry acronym that generally      and deliver the data at centralised computer servers.
refers to a system of devices, computers and software that can continuously
log the meter reading output from utility meters and other devices and            RealSens* is a self-diagnostic system and it contains algorithms that can
transmit that data at pre-set intervals or on request, via a two-way              automate many utility functions, e.g. metering and billing, leak and outage
communication system, to a central data base server, from where the data          detection, maintenance and repair crew dispatching, reporting on system
can be analysed, re-packaged and used to drive the automation of all kinds        anomalies and populating other operational and/or planning software.
of utility processes. AMI systems are by their nature “remote” collectors of      RealSens* can also allow utility managers to incorporate distributed “green”
data and can also be used to perform control functions by virtue of their         energy facilities into a “smart grid” system.
two-way communication systems.
                                                                                  By its nature, RealSens is a “multi-utility” metering and communication
Reonet’s RealSens* AMI system is designed around a two-way, license-              system, that allows the remote, automated or on-demand metering of multiple
free, fixed radio network. The system comprises of devices that record and        utility meters, including water, electricity, gas, hot and chilled water,
store utility metering data, transmit the data to repeaters and GSM modems        temperature, etc.


                                                                RealSens diagrammatic lay-out




RealSens* trademark application is pending in several jurisdictions.
                                               REONET Back to the Future
African Utilities Week Exhibition 19-20 May 2009 – Cape Town
                                                      Reonet participated as an exhibitor at the African Utilities Week in Cape Town from 19-20 May 2009 and
                                                      by the level of interest expressed, our participation can only be adjudged a huge success. What is
                                                      particularly gratifying is to observe the highly increased awareness by all stakeholders of the looming
                                                      shortages of water and energy and the sharply increased cost of supplying those scarce commodities.
                                                      Also, the impact that utilities provision has on the environment is beginning to attract the interest and
                                                      concern of national and international decision-makers, with dirty coal-fired electrical energy generation
                                                      contributing to more than a third of all global CO2 emissions.


A Crowded Earth Competes For Resources
This new awareness and concern might be just in time, considering global
population growth, from about 1 billion people just over a century ago, to
6,8 billion today and an estimated 9 billion by 2050. These are staggering
numbers, and this, together with the already well-documented impact of
man-made increased CO2 levels in the atmosphere on climate change, with
far-reaching potential consequences on food security, water supply and
habitat destruction, has moved the utilities provision business to the top of
the political agenda.
The debate is no longer as to WHETHER the demand on utilities should be
reduced but HOW it could be reduced. With regards to utilities, it is common
knowledge in the industry that as much as half of all water and energy
produced, is not beneficially consumed. Reonet has always maintained that
one cannot manage that which cannot be measured. Reonet’s RealSens*
AMI system can help utility managers measure and locate non-optimal
delivery and consumption of utilities in near-real-time and as such assist
them with appropriate intervention decisions.


Think Smart... Think Green... Think Sustainable




The move towards “smart grids”, the incorporation into utility grids of distributed “green” energy production (wind, solar and biomass) and water and energy
demand management, have almost overnight created a market for online remote metering and control systems, i.e. AMI. Reonet’s RealSens* AMI is a market
leader in this new technology and Reonet is one of a very few companies globally who can claim to have a fully functional, cost-effective, tried-and-tested
operational system in the ground.

Next quarter we will bring you news on AMI developments to measure “green” energy for claiming carbon credits. Until then, please remember to turn off
power points when not in use and fix those leaking cisterns... they cost you more than you think...


                                                                         Prophetic?
                                             Consider Jim Wright’s quote from “the coming water famine”, 1966 ...!
         “Pure water, when and where you need it, is worth whatever it costs to get it there.”

What Our Readers Think
We at Reonet would very much like to hear from our readers what you think of our newsletter. First and foremost, we need to know whether you would like
to continue to receive our newsletter. We promise that you will never see it again if you don’t want to receive it, unless you request it! About the content, do
you find it informative, interesting, easy to read, concise enough, elaborate enough, topical, relevant, etc.? Would you like to hear more about our other business
activities, projects, history, individuals in our company, etc.? Are you interested to participate with Reonet as a collaborator, business partner, marketing &
sales agent, or conduct research or share information about the utilities and environmental care markets? Are you an interested investor in the utilities, water,
renewable energy or environmental care markets? Would you like to exchange information with us? Would you like to contribute to our newsletter? All authors
will be acknowledged.




In future newsletters, this page will be reserved for readers’ comments. Take care until October 2009

				
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